HUD Faces Opposition Over Down Payment Ban
|October 3, 2007|
A decision to end down payment assistance programs within the U.S. Department of Housing and Urban Development (HUD) has raised a few eyebrows among agencies that advocate for the expansion of the American Dream.
HUD announced recently that it's eliminating the organization's privately-funded down payment assistance program for borrowers due to research that shows homeowners receiving down payment aid are more likely to default on mortgage loans.
In opposition, groups like Nehemiah Corporation of America and AmeriDream Inc. have released statements criticizing the change. Both agencies also filed suit in U.S. District Court, claiming HUD's decision defies its original mission of fostering homeownership across America.
AmeriDream, a charity that provides homeownership education, loss mitigation counseling, and privately-funded down payment assistance, calls HUD's decision in its lawsuit “arbitrary and capricious.” The agency added, “Enforcement of this regulation will cause immediate and irreparable harm to plaintiff AmeriDream, Inc. and is contrary to public interest. The regulation will disrupt financial arrangements in connection with numerous home sales, and deprive many aspiring low-and moderate-income home buyers who rely on DPA of the ability to purchase their own homes.”
Scott Syphax, president and chief executive officer of Nehemiah Corp. of America—another nonprofit that provides down payment assistance—also issued a statement opposing HUD's decision.
“HUD's action to move forward with banning privately-funded down payment assistance programs is outrageous and we have responded by filing a lawsuit in Federal Court yesterday to challenge the merits of HUD's damaging rule and to seek an injunction blocking implementation of this rule,” Syphax said. “It is inconceivable that HUD has taken this action in complete disregard for the House's passage of legislation that would block it, driven by strong bipartisan support from House Financial Services Sub-Committee on Housing Opportunity Chair Congresswoman Maxine Waters (D-California) and fellow committee member Congressman Gary Miller (R-California).”